Equity Method Investment And Receivable From Investee

12 Months Ended

Dec. 31, 2011

Equity Method Investment And Receivable From Investee [Abstract]

Equity Method Investment And Receivable From Investee

3. Equity Method Investment and Receivable From Investee

On December 31, 2011, our voting ownership in Real Goods Solar declined to 37.5% and, therefore, we changed our reporting for this investment from consolidation to equity method. In conjunction with this deconsolidation of Real Goods Solar, we remeasured and adjusted our equity investment in Real Goods Solar to its estimated fair value based on Real Goods Solar's closing stock price on December 30, 2011 (which is a level 1 input in the fair value hierarchy), and, thus, reported a pre-tax loss from deconsolidation of $4.5 million and, due to an adjustment to a deferred tax liability related to this investment, an after-tax gain of $2.6 million. See Note 11. Income Taxes.

In connection the Real Goods Solar's acquisition of Alteris, we advanced Real Goods Solar $1.7 million on December 31, 2011 ("advance date"). If not repaid within one year from the advance date, the advance converts to a subordinated loan bearing interest at a rate of 10% per year and maturing in three years. The remainder of the amount receivable from equity method investee represents amounts owed in the ordinary course of business under our Intercorporate Services, Tax Sharing, and Industrial Building Lease Agreements with Real Goods Solar.

Under our Intercorporate Services Agreement with Real Goods Solar, we provide services under the direction of Real Goods Solar and have no power to act independently on Real Goods Solar's behalf other than as specifically authorized under the agreement or from time to time by Real Goods Solar. Real Goods Solar and us agree on the aggregate annual amount for a particular year for the services based upon a good faith estimate of the services required for that year and the estimated fees for such services. Upon a change to the annual amounts for a particular year, the parties make appropriate payments to reflect such change. The annual amount and formula for various services making up the annual amount, as well as any quarterly changes, are approved in writing by each of our and Real Goods Solar's board of directors.

As specified by our Tax Sharing Agreement with Real Goods Solar, to the extent Real Goods Solar becomes entitled to utilize certain loss carryforwards relating to periods prior to its initial public offering, it will distribute to us the tax effect (estimated to be 34% for federal income tax purposes) of the amount of such tax loss carryforwards so utilized. These net operating loss carryforwards expire beginning in 2018 if not utilized. Due to our step acquisitions of Real Goods Solar, it experienced "ownership changes" as defined in Section 382 of the Internal Revenue Code. Accordingly, its use of the net operating loss carryforwards is limited by annual limitations described in Sections 382 and 383 of the Internal Revenue Code. As of December 31, 2011, $4.4 million of these net operating loss carryforwards remained available for current and future utilization, meaning that Real Goods Solar's potential future payments to us, which would be made over a period of several years, could therefore aggregate to approximately $1.6 million based on current tax rates.

On December 19, 2011, we entered into an Industrial Building Lease Agreement with Real Goods Solar for office space located in one of our owned buildings in Colorado. The five year lease commenced on January 1, 2012 and has a monthly payment of approximately $16,300 plus common area maintenance expenses.

At December 31, 2011, we owned approximately 37.5% of Real Goods Solar's Class A common stock with an estimated fair value of $14.3 million based on the closing market price of Real Goods Solar's Class A common stock on December 31, 2011. At December 31, 2011, our equity in the net assets of Real Goods Solar was approximately $19.1 million.

Summarized financial information for our equity method investee, Real Goods Solar, is as follows:

(in thousands)	December 31, 2011
Current assets	$	56,859
Noncurrent assets		32,690
Total assets	$	89,549

(in thousands)	December 31, 2011
Current liabilities	$	38,108
Noncurrent liabilities		635
Total liabilities	$	38,743

(in thousands)	For the Year Ended December 31, 2011
Net revenue	$	109,257
Gross profit		(27,860	)
Net loss		(1,900	)